Articles Posted in Criminal IP

Indianapolis, Ind. – The Indiana Court of Appeals granted Indiana’s petition for rehearing and reaffirmed its January ruling in favor of defendant Michael Curtis that a conviction for fraud in the form of copyright infringement was, by itself, an insufficient predicate for forfeiture.

Curtis was charged with four counts of Class D felony fraud for selling pirated movies out of his truck.  He pleaded guilty to one count of fraud, which was entered as a misdemeanor, and the remaining charges were dropped.  The state also filed a complaint for forfeiture of Curtis’s truck under Indiana Code § 34-24-1-1(a)(1)(B) (2009), which allows the seizure of vehicles “if they are used . . . to transport . . . stolen [IC §35-43-4-2] or converted property.”  The trial court granted the forfeiture.

The Indiana Court of Appeals reversed the decision, holding that fraud in the form of copyright infringement was neither garden-variety theft nor conversion and, thus, was not within the scope of the forfeiture statute.  We blogged about that decision here.

The state asked for and was granted a rehearing.  It argued that Yao v. State, 975 N.E.2d 1273 (Ind. 2012), required a different outcome.  The appellate court disagreed, stating that, while Yao “might support the proposition that pirated movies constitute stolen property,” it failed to answer the question of forfeiture.  On that issue, the court looked to Katner v. State, 655 N.E.2d 345 (Ind. 1995).

In Katner, the Indiana Supreme Court reversed the forfeiture of a vehicle predicated on an empty container in the possession of the driver that was found to have cocaine residue.  There, the trial court had ordered the defendant’s vehicle forfeited under a statute allowing forfeiture where a vehicle was used to transport a “controlled substance for the purpose of. . . [p]ossession of cocaine.”  The Court held that the state had not met its burden under the forfeiture provision to show a nexus between the property to be forfeited and the underlying offense.

The appellate court in this case held that such a nexus analysis was also appropriate for the forfeiture provision which applies to stolen or converted property.  As the state had apparently had not shown a nexus between the use of the truck and the sales of the pirated movies, the court affirmed its earlier decision.

Practice Tip: It looks like Curtis can keep his truck.  However, in the January decision, the appellate court suggested that legislation would likely be required to allow forfeiture in cases involving copyright infringement.  In contrast, this current decision seems to hold that, should the required nexus between property and copyright infringement be proven at trial, a forfeiture statute could be used to seize property involved in that infringement.
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Indianapolis, IN – The Indiana Court of Appeals has vacated the decision of The Honorable Timothy Oakes, Marion County Superior Court, to seize the truck of a defendant who pled guilty to fraud for having sold pirated movies from the truck.

In December 2009, the State charged Michael Curtis with felony fraud for selling pirated movies out of his truck.  The State also sought forfeiture of the truck from which the movies had been sold under 34-24-1-1(a)(1)(B) which allows for the seizure of vehicles that are used to facilitate the transportation of “stolen . . . or converted property” valued at $100 or more. 

Curtis pled guilty to one count of fraud and the remaining charges were dismissed.  The court granted the State’s motion to seize the truck.  Curtis filed a motion in opposition, which was not granted, and later appealed.

Upon appeal, Curtis cited Dowling v. United States, 473 U.S. 207 (1985) as precedent and the Indiana Court of Appeals discussed the case.

The U.S. Supreme Court held that a copyright was “no ordinary chattel,” Dowling, 473 at 216.  Theft of a copyrighted work via infringement was held to be distinguishable from theft of tangible property as it “plainly implicates a more complex set of property interests than does run-of-the-mill theft, conversion, or fraud.”  Id. at 218.

In Dowling, the defendant had engaged in infringement but had been convicted under the portion of the National Stolen Property Act (“NSPA”) which criminalized actions wherein items, subject to other conditions, were “stolen, converted or taken by fraud.”  18 U. S. C. § 2314.  The Court ruled that the language of “stolen, converted or taken by fraud” did not include copyright infringement.  Under the rule of lenity — a rule which calls for construing ambiguous criminal statutes in favor of criminal defendants — the Court held that the defendant had not violated the NSPA by infringing upon a copyright.

In Dowling, the rule of lenity caused the Court to construe the language of a criminal statute narrowly.  Here, the Indiana Court of Appeals was asked to interpret a statute authorizing forfeiture, another type of statute that is strictly construed.  As the language “stolen . . . or converted” did not include either fraud or copyright infringement, the order of the trial court to forfeit the truck was vacated.

Practice Tip: While the penalties for copyright infringement can be significant, the rule in Dowling will presumably prevent many statutes prohibiting theft of tangible items from being applicable to copyright infringement unless the legislature makes clear its intent to include copyright infringement in the language of the statute.

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